[AASM] Professional Crisis: Who do the clients belong to?

I’ve discussed this topic before in several different posts with broader subjects (in this post about whether or not it’s a good idea to allow a resigning employee to work out their two week notice, in this post about how “stolen” clients aren’t actually stolen, and in several others) but I haven’t written a specific article about client distribution after a separation.

Here it is.

“One of my employees stole the client database and opened a new salon down the street. Can I sue her?”

It depends.

Was the “employee” actually an employee?

If the employee was a booth renter, you have no right to their client contact information. Your business, with regards to the tenants you lease space to, isn’t a “salon,” it’s a small-scale commercial real estate operation. You should not store any renter’s client contact information in a central database to begin with since you aren’t a their employer—you’re their landlord.

If the employee was a “1099” or “independent contractor,” there’s a damn good chance you weren’t using the classification appropriately. If you choose to sue a misclassified employee, you run the risk of incriminating yourself for violating federal tax and labor laws (and probably state tax and labor laws also). I have seen this happen. Don’t be a dummy. Let it go, learn your lesson, hire an attorney and straighten out your business so this kind of thing doesn’t happen in the future.

If there’s even a slight possibility this legal endeavor could
backfire—DO NOT.

Did the employee sign a non-solicitation agreement? If so, you can likely seek legal action for database theft and solicitation. (I personally have and would do it again.)

When an ex-employee downloads a database or steals a binder full of client contact information, they are doing so deliberately with the sole intention of harming your business. Those clients did not entrust that information to the employee; they entrusted that information to your business, and by extension, you.

It is your responsibility to ensure the security of client information. Your databases should have strict controls prohibiting export. If you’re still on a paper filing system, get with the times and go digital. (At the very least, buy a locking file cabinet.)

Data theft is theft. There’s no justification for it.

“I’m a renter. My landlord stole my client information. What can I do about it?”

This can be a sticky situation if you used an online booking system “the salon” provided. If so, the odds of you receiving a favorable outcome are questionable. In my opinion, your client contact information should be given to you. End of story. The basis of my argument is that the landlord should not have been using a central booking system to begin with, since it constitutes an inappropriate degree of control over your business. (The other side of that coin is that you had absolutely no business using it. What were you thinking? Did you truly believe it was a good idea to hand over your most valuable business asset to your landlord? Maybe be less trusting in the future, mmkay?)

However, there’s a slight possibility a judge may not agree with my assessment since the booking system was provided by the landlord and the account is in their name. I consider that possibility incredibly slight—like, one chance in ten, depending on how irritated with the stupidity of the situation the judge is. Really, it was a dumb idea to use a system you didn’t have full control over. A judge may rule in the landlord’s basis on that fact alone, especially if they aren’t very familiar with the industry.

The situation is less sticky if the salon owner actuallystole the information. For example, if a salon owner confiscates your paper records or your client binder, that’s definitely theft. They took an item—a business asset—that belonged to you. You purchased the binder/paper. You filled it with your salon’s proprietary business data. It was yours. They took it. There’s little room for debate there. They didn’t have a right to take your book.

In either case, I’d personally hire an attorney and pursue the landlord in court.

“One of my coworkers is soliciting my clients. We’re both employees but we’re on commission. Every client who leaves my chair for hers affects my performance numbers and, of course, my paycheck. What do I do?”

This is a situation for the salon owner/manager. Tell them immediately.

Any employees who try to poach clients from other employees in any of the salons I’ve managed get fired. It’s one thing if a client chooses to switch to another professional, but when an employee is actively attempting to sabotage another employee’s clientele, that’s grounds for immediate dismissal. It is unprofessional, causes resentment in the workplace, and makes clients uncomfortable. It destroys the team environment employment-based salons strive to establish.

If your salon owner gives a crap about their business, at the very least that employee will be written up.

Were you an employee? If so, absolutely. The client data doesn’t belong to you; it belongs to the business. It’s not actually yours, even if the salon owner required you to “market yourself.”

Did you bring the clientele with you to the salon? If you brought the clients but didn’t sign an employment contract excluding them from any non-solicitation agreements you signed or agreed to at the time you accepted the position, there’s likely nothing you can do.

If you weren’t an employee, the owner likely had no legal right to fire you, let alone take your client data. Read my post, Know Your Rights. You probably have bigger problems than client theft right now.

“If I quit… If I get fired… If I fire or evict a professional… Who gets the clients?”

Finally, the question I receive the most frequently—the generic, “Who do the clients belong to? Who gets to keep the clients? Me or them?”

Where did you get the idea that you had the ability to make this determination? It’s like the two of you (owner and professional) are “breaking up” and have to figure out who gets to keep the dog.

Clients aren’t pets. They don’t “belong” to you and neither of you can choose to “keep” them.

Clients have the right to choose where and how they spend their money. Neither the professional nor the salon “own” the customers themselves.

In an employee/employer situation, the employer owns the client database.
In a landlord/tenant situation, the tenant (who is a business owner) owns their client data.
But when it comes down to it, neither of you get to control the clients themselves or ultimately dictate where they go for their services.

People deserve to be given the ability to make their own spending decisions. If an employee or tenant resigns or is terminated, their clients should be informed of their departure and given the information necessary to find their preferred professional.

And when I say “the clients need to be informed,” I mean they need to be informed in advance of their appointment.

Too often, salon owners will shift the clients of a departing employee to the remaining employees. That client will arrive for their appointment only to find their trusted professional is gone—and not only did the owner not have the decency to tell them, but they had the audacity to put them into the hands of a complete stranger. This is a poor management practice that’s guaranteed to cost the salon a client’s business and their respect for the establishment.

“Should I tell the clients where the departing employee went if they ask?”

Don’t disrespect your customers by lying to them or attempting to hinder their ability to find their stylist, nail technician, or estitician. By and large, clients will always be loyal to the professional and not the establishment. Respect them and the relationship they have with their professional. It takes some clients years to find the person that’s just right for them.

Don’t be petty.

If a client asks where the professional went and you know, you need to tell them. Nothing is more pathetic than a bitter salon owner who smirks and says, “Sorry. That’s confidential information,” when a customer reaches out to them for help. As silly as it may seem, the sudden loss of a trusted professional can put some clients into an outright panic (especially if they’ve finally found “the one”). Again, respect their right to choose. Don’t be an asshole.

Before the salon owning keyboard warriors who are new to this site try and come down on me, let me tell you who I am. My name is Tina Alberino. I’m a salon owner too. I know we invest in our professionals. We advertise, we educate, and we bend over backwards to generate client loyalty. We work hard to build our businesses, and that’s why I’m advising you not to crap on that reputation you’re working so hard to build by acting like a spiteful teenager.

“Can I force clients to return to my salon since my ex-employee signed a non-solicitation agreement?”

No (because that’s ridiculous), but why would you want to?

IF A CLIENT DOESN’T SEE THE VALUE IN WHAT YOUR BUSINESS CAN OFFER THEM, DO YOU REALLY WANT THEM THERE?

Don’t embarrass yourself. Those clients don’t belong in your salon. They’re replaceable, but your dignity is not. There are plenty of clients out there for everyone. Let it go.

If an employee violated a non-solicitation (and you can prove it), you can take them to court for breach of contract if you’d like, but the judge isn’t going to be able to somehow force the clients to return to your salon.

Beauty industry survivalist, salon crisis interventionist, tactical verb-weapon specialist, and the leader of at least a hundred workplace revolutions, Tina Alberino is known as much for her extensive knowledge as for her sarcastic wit and mercilessly straightforward style. She’s the author of the book The Beauty Industry Survival Guide and the blog This Ugly Beauty Business. When she’s not writing, educating, or consulting, she can be found overthinking everything, identifying problems people didn’t know existed, and stubbornly working to change the things she cannot accept.

4 COMMENTS

I tried to find a legal case that established some legal precedent but the only thing I could locate was this blurb.

42 states have adopted some form of a statute called the “Uniform Trade Secrets Act.” If your state has adopted a version of this act, then you’re prohibited from stealing your employer’s “trade secrets” and using them for your own benefit, even without a written agreement with the employer.

In most states, a firm’s client list would be considered a “trade secret” unless its content can be “readily obtained through some independent source.” So if you download the firm’s entire client list onto a computer diskette or CD and then send a letter to everyone on that list announcing the opening of your new firm, your old firm will almost certainly view that as a theft of its “trade secrets” and will sue you for that.

I’m curious about is this example. You leave a salon. The client follows. They can go anywhere they want. But if you added them on Facebook but didn’t solicit their business. Does the old salon have legal grounds to take you to court. Would love to see some court cases that really solve the aspect of employee leaves and didn’t take client information. So they are not violating any trade secrets. I’m guess the issue is did you sign a contract preventing you from friending them on social media or trading phone numbers. How can a business legally prevent employees from friending clients?

They’d have to put it in their contracts, and a lot of salon owners do. Their non-solicitation clauses and employee handbook terms prohibit social media friendships/contact. However, if the employee chooses to create an online portfolio and that client seeks out that portfolio, then finds where the employee works after separation, that’s not considered solicitation since the client had to seek that information themselves.

Whether or not a salon owner would be successful in using the Uniform Trade Secrets Act is debatable. Personally, I think it’s open and shut. However, personal experience has shown that judges either don’t care or prefer competitive business practices. Then again, the majority of the small claims cases I’ve seen this occur in usually involve owners who have been doing a lot of shit wrong, so they didn’t have the moral or legal high ground.

Hi Tina, currently I’m an employee for a chain salon that’s very popular throughout the country. I’ve been an employee with the company for many years and have gained many close relationships with our clientele. Throughout the last few months however though I’ve become unhappy and ready to move seek new opportunities with other companies. Would it be unlawful/ soliciting to thank my clients and depart leaving my own contact information (phone number, email, Facebook) without obtaining any of theirs?

It depends on whether or not you have signed a contract. If you’re with one of the national chains, one of the terms of your employment likely did include a non-solicitation agreement. It wouldn’t be unlawful to thank them, but it would be to give them contact information (since that’s certainly considered solicitation).